Sunday, December 29, 2013
9:17:59 PM EDT

Time To Check Your Stops

by
James Brown

Our plan was to close our CZR and DLTR trades on Monday, December 23rd. We also closed the 2014 JPM calls for a gain.

The watch list produced four new trades (GE, HD, MSI, and WFC).

Closed Plays

CZR and DLTR were closed as planned.
We also closed the 2014 JPM calls.

Play Updates

American Intl. Group - AIG - close: 51.18

Comments: 12/29/13:
The stock market may have marched higher but shares of AIG only saw a minor gain last week. Shares appear to be struggling with resistance near the top of its gap down from late October (51.50-51.65 area).

We are down to the last three weeks on our January 2014 calls. More conservative traders may want to abandon ship. Any drop in AIG shares is going to hurt the 2014 options significantly.
I am not suggesting new positions at this time.

Comments: 12/29/13:
AVGO slowly drifted higher this past week. This stock is still arguably overbought here. Do not be surprised to see a pullback. Tonight we're raising the stop loss to $45.90.
I am not suggesting new positions at this time.

Current Target: $58.50
Current Stop loss: 45.90
Play Entered on: 11/11/13
Originally listed on the Watch List: 09/22/13

Bank of America - BAC - close: 15.67

Comments: 12/29/13:
BAC underperformed both the broader market and the financial sector last week. Shares consolidated sideways and BAC almost closed unchanged on the week.
I'm not suggesting new positions.

Comments: 12/29/13:
BBT extended its rally to four up weeks in a row. That was mainly due to a rally last Monday. The rest of the week saw BBT drift sideways. Shares look short-term overbought. Look for support near $36.00.

Current Target: BBT @ 42.50
Current Stop loss: 32.95
Play Entered on: 12/17/13
Originally listed on the Watch List: 12/15/13

Capital One Financial - COF - close: 75.78

Comments: 12/29/13:
COF gained just over a dollar for the week. Friday's minor declined snapped a six-day winning streak. I am raising our stop loss to $69.45. I'm not suggesting new positions at current levels.

12/29/13 new stop loss @ 69.45
12/22/13 new stop loss @ 68.35
*option entry price is an estimate since the option did not trade at the time our play was opened.

Current Target: COF @ 84.00 for 2015 calls
Current Stop loss: 69.45
Play Entered on: 11/29/13
Originally listed on the Watch List: 11/17/13

E.I. du Pont - DD - close: 64.25

Comments: 12/29/13:
We have been fortunate with our DD trade. The stock has turned in a strong two-week rally and a bullish breakout to new highs. We only have three weeks left on our 2014 calls. I am suggesting we exit these calls immediately
on Monday, December 30th at the opening bell. More aggressive traders can risk holding on to them. They should appreciate quickly once DD rises above the $65.00 level but any decline will produce big drops in the option.
I am not suggesting new positions.

Current Target: DD @ 69.00
Current Stop loss: 58.90
Play Entered on: 10/25/13
Originally listed on the Watch List: 08/11/13

Deer & Co - DE - close: 90.70

Comments: 12/29/13:
DE has produced an impressive rally from its early December lows near $82.25. Yet now it appears that the rally is losing steam. A normal retracement would suggest a pullback toward the $88.00 area. I am not suggesting new positions at this time.

12/22/13 new stop loss @ 83.75
12/10/13 trade opens. DE @ 87.26
*option entry price is an estimate since the option did not trade at the time our play was opened.
12/09/13 DE closed @ 87.20, above our suggested entry of a close above $86.25

Current Target: DE @ 98.50
Current Stop loss: 83.75
Play Entered on: 12/10/13
Originally listed on the Watch List: 12/08/13

Dollar General Corp. - DG - close: 60.11

Comments: 12/29/13:
Caution! The action in DG last week was not bullish. The stock peaked near $62 and has produced a three-day pullback. In contrast the market has been hitting new highs. I am not suggesting new positions.

We only have three weeks left on our 2014 January options. Investors with these options may want to exit early now.

Earlier Comments:
Our long-term target is $64.00 for the 2014 calls. Our target is $69.00 for the 2015 calls.
FYI: The point & figure chart is bullish with a $78.00 target.

Current Target: 64.00 for the 2014s, 69.00 for the 2015s
Current Stop loss: 54.75
Play Entered on: 09/06/13
Originally listed on the Watch List: 08/04/13

The Walt Disney Co. - DIS - close: 74.35

Comments: 12/29/13:
DIS delivered another strong week with shares setting new record highs. Broken resistance near $72 and $70 should offer new support if DIS were to see a pullback. Tonight I am adjusting our stop loss to $67.40.

Current Target: DIS @ 84.00
Current Stop loss: 67.40
Play Entered on: 10/23/13
Originally listed on the Watch List: 10/13/13

Dick's Sporting Goods - DKS - close: 57.53

Comments: 12/29/13:
DKS only saw minor gains last week. The stock has been testing new short-term resistance near the $58.00 level. If the market sees a pullback I would look for DKS to dip toward the $56.00 level.

Our long-term target is $65.00. More aggressive traders could aim higher.
The point & figure chart is already bullish and forecasting at $71 target.

11/12/13 trade opens. DKS opens at $54.73
*option entry price is an estimate since the option did not trade at the time our play was opened.
11/11/13 closed about our suggested entry trigger (above 54.50)
10/27/13 removed the 2014 call.

Current Target: DKS @ 65.00
Current Stop loss: 49.95
Play Entered on: 11/12/13
Originally listed on the Watch List: 10/06/13

Freeport-McMoRan - FCX - close: 37.50

Comments: 12/29/13:
Gold bounced from its mid December lows and copper continued to rally. Together they helped lift FCX to a +5.0% gain last week. FCX looks short-term overbought. I suspect that both gold and copper prices could dip this coming week so expect a pullback in FCX. Tonight I am raising our stop loss to $33.45.

12/29/13 new stop loss @ 33.45
11/13/13 FCX hits our buy-the-dip entry point at $35.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
10/27/13 strategy update: removed the 2014 calls
adjust the buy-the-dip trigger to $35.25 and the stop to $32.25.
adjust the option strike to the 2015 Jan $39 call

Current Target:$ 42.50
Current Stop loss: 33.45
Play Entered on: 11/13/13
Originally listed on the Watch List: 09/15/13

Fluor Corp. - FLR - close: 79.76

Comments: 12/29/13:
FLR eked out a small gain for the week. Yet shares have been unable to really breakout past resistance at the $80.00 level. I suspect that FLR is due for a pullback soon. Unfortunately a retreat from current levels would almost look like a bearish double top at the $80 mark.
I am not suggesting new positions at this time.

Earlier Comments:
We will plan to exit our 2015 calls when FLR trades at $88.00.

12/22/13 new stop loss @ 74.40
11/24/13 new stop loss @ 72.75
11/13/13 exit target hit for 2014 Jan. $70 calls
11/10/13 new stop loss @ 71.40
10/31/13 FLR reported earnings and management lowered guidance
10/20/13 new stop loss @ 68.80
adjust exit targets: Target for 2014 call is $79.00
target for 2015 call is $88.00
09/22/13 new stop loss @ 64.75
09/22/13 adjust exit target from $74.75 to $79.50
09/20/13 high for the day was $74.72
*option entry price is an estimate since the option did not trade at the time our play was opened.

Current Target:$ Target for 2014 call is $79.00,
Target for 2015 is $88.00
Current Stop loss: 74.40
Play Entered on: 09/12/13
Originally listed on the Watch List: 08/11/13

General Electric - GE - close: 27.83

Comments: 12/29/13:
GE is a new trade. We added GE as a watch list candidate last week. The plan was to wait for shares to breakout past resistance near $27.50 and close above $27.65. GE met that requirement with Thursday's close at $27.83. Our trade opened on Friday morning at $27.84. I would still consider new positions now. More nimble traders could buy calls on a dip at $27.50, which should be new short-term support.

Earlier Comments:
Keep in mind that GE doesn't move very fast so we'll need to be patient.

FYI: GE is scheduled to report earnings on January 17th. We can expect to see an increase in volatility following the announcement.

Current Target: GE in the $32.50-35.00 zone.
Current Stop loss: 25.95
Play Entered on: 12/27/13
Originally listed on the Watch List: 12/22/13

Home Depot, Inc. - HD - close: 81.64

Comments: 12/29/13:
HD is another watch list candidate that met our entry point requirement with the market's post-Christmas rally. We were waiting for HD to close above $81.50. Shares closed at $81.55 on Thursday. Our trade opened Friday morning at $81.65. I would still consider new positions now at current levels.

Earlier Comments:
Our long-term target is $99.00.
FYI: The point & figure chart is bullish with a $97 target.

Current Target: HD at $99.00
Current Stop loss: 76.75
Play Entered on: 12/27/13

Originally listed on the Watch List: 12/01/13

HollyFrontier Corp. - HFC - close: 49.30

Comments: 12/29/13:
HFC spent last week consolidating sideways in the $49-50 zone. A breakout past round-number resistance at $50.00 could be used as an alternative entry point to launch positions.
Bear in mind that I am cautious on this trade given HFC's recent volatility over the last few weeks. If you're launching positions I would start small.

Earlier Comments:
NOTE: The options for HFC have changed. Due to a 50-cent special dividend the option strikes have all been adjusted down by 50 cents. Our listed option strike 2015 January $49.50 has become $49.00.

12/29/13 new stop loss @ 63.75
12/09/13 planned exit for 2014 calls. option @ $3.70 (+56.7%)
12/08/13 prepare to exit 2014 calls immediate on Monday morning
12/08/13 new stop loss @ 62.75
11/17/13 new stop loss @ 61.45
adjust the exit target for 2015 calls to $74.50
10/20/13 do not be surprised to see some profit taking after HOG reports earnings on Oct. 22nd.
09/22/13 new stop loss @ 59.00
*note the entry price on our 2015 call is an estimate since the option did not trade at the time our play opened.

Current Target:$ 98.00
Current Stop loss: 84.85
Play Entered on: 05/07/13
Originally listed on the Watch List: 05/04/13

Helmerich & Payne, Inc. - HP - close: 83.96

Comments: 12/29/13:
HP set a string of new highs last week. If the market were to see a pullback look for HP to dip back toward the $80 area, which is short-term support.
I am raising the stop loss to $77.45.

12/29/13 new stop loss @ 77.45
12/05/13 trade opens with HP opening at $81.00
*option entry price is an estimate since the option did not trade at the time our play was opened.
12/04/13 HP closes at $80.97, above our suggested trigger @ 80.25
11/17/13 strategy change: Wait for HP to close above $80.25 and then buy calls the next day with a stop loss at $74.75. Our new long-term target is $95.00. New option strike at 2015 $90 call

Current Target:$ 95.00
Current Stop loss: 77.45
Play Entered on: 12/05/13
Originally listed on the Watch List: 10/27/13

JPMorgan Chase & Co. - JPM - close: 58.14

Comments: 12/29/13:
Last week saw JPM breakout past resistance and hit a new multi-year high on Monday, Dec. 23rd. Unfortunately the rally stalled after that and shares consolidated sideways in the $58-58.50 zone. If JPM sees a pullback look for short-term support near $57.00 and then near $55.50.

Our plan was to exit our January 2014 $55 calls on Monday, December 23rd. We still have the 2015 calls.

12/29/13 new stop loss @ 28.75
12/08/13 new stop loss @ 27.75
11/24/13 new stop loss @ 26.75
*option entry price is an estimate since the option did not trade at the time our play was opened.
Current Target: $39.00
Current Stop loss: 28.75
Play Entered on: 10/31/13
Originally listed on the Watch List: 10/20/13

MGM Resorts - MGM - close: 23.15

Comments: 12/29/13:
MGM has extended its current rally to five up weeks in a row. The rally is starting to look a little bit tired. I would not be surprised to see MGM pull back soon.
Consider waiting to buy calls on a dip in the $21.50-21.00 zone. Look for broken resistance near $21.00 to offer some support.

Comments: 12/29/13:
MSI is another watch list candidate that has graduated to our active plays. The plan was to buy calls when MSI hit $66.75. Shares met that trigger on December 23rd (last Monday). I would still consider new positions now. However, if you suspect the market is due for a dip then consider waiting for a dip in MSI near the $66.00-66.50 zone as an alternative entry point to buy calls.

Currently our target is the $80-90 zone but we'll be more specific as the trade progresses. Currently the point & figure chart is bullish with a long-term target at $91.00.

Chart of MSI:
Current Target: Exit when MSI trades in the $80-90 zone.
Current Stop loss: 61.90
Play Entered on: 12/23/13
Originally listed on the Watch List: 12/08/13

The Manitowoc Co. - MTW - close: 23.43

Comments: 12/29/13:
Like one of the company's giant cranes, the rally in MTW continues to stretch higher. The stock is now up five weeks in a row. I am worried MTW has grown overbought here. Look for support in the $21-22 zone.

If you're looking for a new entry point I would consider waiting to buy calls on a dip near $22.00.

12/19/13 trade opens. MTW @ 22.33
*option entry price is an estimate since the option did not trade at the time our play was opened.
12/18/13 triggered with MTW close at $22.36, above our $22.10 trigger
Current Target: $28.00-30.00 zone
Current Stop loss: 19.90
Play Entered on: 12/19/13
Originally listed on the Watch List: 12/15/13

NVIDIA Corp. - NVDA - close: 15.76

Comments: 12/29/13:
I am throwing in the towel on NVDA. The SOX semiconductor index is up +38% year to date. NVDA is up a healthy +28%. However, all the volatility over the last few months makes it a tough investment to sit on.
You could argue that NVDA is building an ugly looking inverse head-and-shoulders pattern. That might be true. If you're in this camp than a close above $16.00 or the November highs (near $16.30) could be used as a bullish entry point. I am suggesting instead an immediate exit. We'd rather find something a little less volatile to trade. Plan to exit on Monday, December 30th at the opening bell.

12/29/13 prepare to exit on Monday, Dec. 30th at the open
09/22/13 new stop loss @ 14.45

Current Target: exit for 2014 calls is $18.00, exit for 2015s is $19.75
Current Stop loss: 14.45
Play Entered on: 09/12/13
Originally listed on the Watch List: 08/18/13

QUALCOMM Inc. - QCOM - close: 73.80

Comments: 12/29/13:
News that Apple (AAPL) and China Mobile (CHL) had finally confirmed a multi-year deal failed to move the needle much for shares of QCOM.
Shares of QCOM are drifting higher and look poised to breakout past resistance near $74.00 soon.

Earlier Comments:
I want to remind readers that QCOM does a lot of business with Apple (AAPL),
and if AAPL encounters any bad news (example: lower iPhone sales) it could influence trading in shares of QCOM.

Current Target: $85.00
Current Stop loss: 67.75
Play Entered on: 11/15/13
Originally listed on the Watch List: 11/03/13

Starbucks - SBUX - close: 78.57

Comments: 12/29/13:
I am reiterating my cautious stance on SBUX. The stock has continued to bounce from its mid December breakdown. Shares are now testing what I outlined as potential resistance near its 50-dma and the $80.00 level. If Friday's move is any indication then SBUX is poised to fail here at this resistance level. Friday's session created a bearish engulfing candlestick reversal pattern. I am not suggesting new positions.

More conservative investors will want to seriously consider an early exit from our SBUX trade or as an alternative consider raising your stop closer to the $76.00 level.

12/15/13 The breakdown in SBUX this past week throws the up trend in question. Investors might want to exit early now to minimize losses
12/04/13 triggered on a dip at $80.00
12/01/13 adjust the trigger to $80.00
11/24/13 adjust the trigger to $79.25
adjust the option strike to the 2015 January $90 call
11/17/13 adjust the trigger to $78.25
11/10/13 adjust the buy-the-dip entry to $78.00 and stop to $74.75
11/03/13 adjust buy-the-dip entry from $76 to $77.00

Current Target: exit calls when SBUX hits $98.00
Current Stop loss: 74.75
Play Entered on: 12/04/13
Originally listed on the Watch List: 10/27/13

VeriSign, Inc. - VRSN - close: 59.45

Comments: 12/29/13:
VRSN managed to eke out another weekly gain. Yet shares seem to be slowing as VRSN hovers just below round-number resistance at the $60.00 level. I would not be surprised to see a pullback toward $58 or its 30-dma, closer to $57.

Earlier Comments:
We will still have the 2015 calls and our exit target remains $64.50 for this position.

12/22/13 new stop loss @ $54.40
12/02/13 planned exit for the 2014 calls, option @ +141.3%
**option exit price is an estimate since the option did not trade at the time our play was closed.
12/01/13 prepare to exit our 2014 Jan. $55 calls on Monday, Dec. 2nd.
11/24/13 new stop loss @ 52.40
11/17/13 new stop loss @ 49.75
11/03/13 new stop loss @ 48.40
*option entry price is an estimate since the option did not trade at the time our play was opened.
09/15/13 adjust entry trigger: wait for a close over $50.50 instead of $50.25

Comments: 12/29/13:
It was a quiet holiday week for shares of WDC with the stock moving sideways inside the $82-84 zone. I am not suggesting new positions at current levels. If the $82 level fails there could be support near $80. Otherwise WDC could drop toward its 50-dma.

Our long-term target is $94.00. FYI: The Point & Figure chart is bullish with a $91 target.

12/22/13 new stop loss at $74.25
12/10/13 triggered on our buy-the-dip entry at $77.00
*option entry price is an estimate since the option did not trade at the time our play was opened.
12/08/13 adjust the entry point strategy to buy calls on a dip at $77.00 since we missed the breakout (see the December 8th, watch list update)
12/01/13 adjust entry point to a close above $76.50 instead of 76.25 adjust the stop loss to $69.75

Comments: 12/29/13:
WFC is another watch list candidate that has jumped to our active play list. The plan was to wait for shares to breakout past their 2013 highs and close above $45.25. WFC met that requirement on Tuesday with a close at $45.39. Our trade opened on December 26th at $45.50. I would still consider new positions now at current levels. However, the broader market does look a bit overbought. If you wait we might see a better entry point on a dip near $45.00 or $44.50 instead.

Comments: 12/29/13:
WYN spent the holiday week churning sideways on either side of the $73.00 level. The stock looks poised to move higher but if the market declines we could see WYN retesting support near $70.00 again.

Earlier Comments:
The point & figure chart is bullish and currently forecasting a $93.00 target.

Current Target: 85.00
Current Stop loss: 67.40
Play Entered on: 11/18/13
Originally listed on the Watch List: 11/10/13

CLOSED Plays

Caesars Entertainment - CZR - close: 21.03

Comments: 12/29/13:
Last weekend we decided to drop CZR as an active trade because shares were not performing. As luck would have it the stock surged last week with a +3.8% gain. Our plan was to exit on Monday, December 23rd.
The trade closed at $20.33.

12/23/13 planned exit
12/22/13 prepare to exit immediately on Monday morning, Dec. 23rd
12/08/13 DLTR is not performing. Investors may want to exit early now. I am raising the stop loss to $54.45
11/21/13 trade opened on gap down at $55.50. Trigger was $56.25.
gap down was a reaction to earnings news
10/27/13 removed the 2014 call
10/20/13 adjust the trigger to $56.25 and the stop to $52.40

Chart of DLTR:

Current Target: DLTR @ 65.00
Current Stop loss: 54.45
Play Entered on: 11/21/13
Originally listed on the Watch List: 09/22/13